The invention discloses an environment-friendly yellow inorganic pigment. A mole ratio of Bi, V, Mo and Al in the pigment is (19.6-20.4):(9.4-9.7):(0.98-1.05):(0.98-1.05). The invention further provides a preparation method of the pigment. The preparation method comprises the steps of: S01: mixing and stirring bismuth oxide, aluminum nitrate, nitric acid and water till solids are dissolved completely to form a solution A, S02: mixing and stirring ammonium metavanadate, ammonium molybdate, sodium hydroxide and water till solids are completely dissolved to form a solution B, S03: dissolving polyethylene glycol in water to form a solution C, and dropwise adding the solution A and the solution B into the solution C simultaneously, S04: cleaning and drying a filtration product and S05: performing firing. The bismuth yellow pigment is fine in particle size, large in specific surface area and good in color development performance. The preparation method of the bismuth yellow pigment is simplein technology, and has lower requirements and simple procedures on equipment in a large-scale production process, and therefore, the cost is greatly lowered.